Tobacco Tax Decline Examined

A special committee of the Senate met early August to look into the decline in tax revenue from the tobacco industry.

The Federal Board of Revenue’s (FBR) tax officer who had earlier claimed that revenue collection from the sector was higher was questioned by Senator Kulsoom Parveen, who was chairing the meeting. In response, Auditor General of Pakistan (AGP) Javaid Jehangir said they stand by their revenue numbers, which were collected from the data of FBR.

Parveen said, “It is the incompetence of FBR and it seems it was sleeping while the revenue of companies kept increasing from billions to trillions.”

She also said that it was a sorry state of affairs that there was a decline in tax collection.

According to the AGP, the introduction of a third-tier tax system revealed that sales of tobacco companies jumped 31.64% in fiscal year 2017-18 compared to the previous year. However, there has not been any corresponding effect on tax collection, which increased by a mere 4.5%.